The economy of India could grow more slowly than expected during fiscal year 26, with the chief economist of HSBC, the economist Pranjul Bhandari, warning him that the increase in the prices of American President Donald Trump could shave 0.5 percentage point of GDP growth this year.
“We (India) (India) sell a lot of goods in the United States and now we will be billed for an additional tax on this subject, which is higher than what you have been billed before,” said Bhandari in an exclusive interview with Rahul Kanwal by Business Today. “Someone will have to bear this pain – either the Indian producer of this property or the American consumer of this property or a mixture of the two.”
Bhandari believes that the GDP growth of India could be lower than the previous projection due to the direct blow of the prices. “For example, I expected growth to be 6.5%, but it could be 6% now or perhaps slightly lower,” she said. “So there will be growth trail on the back of all this.”
While reducing rate reductions in the India reserve bank can help amuse the blow, Bhandari has reported a second more worrying impact: a slowdown in world commercial volumes.
“There is also an indirect trail that we must be very careful. With all these prices, the volumes of global growth will slow … There will be this great indirect impact. My feeling is that GDP growth in India will be lower in FY26 much more than we had thought.”
On the sectoral effects, Bhandari said that the impact is fluid and very sensitive to policy changes. “We can discuss a set of winners and losers today, but if changes are made, this set could change completely tomorrow,” she noted.
For example, she pointed out that pharmaceutical exporters initially feared a blow, but their prospects changed overnight when pharmaceutical products were exempt from prices. “So, today, pharmaceutical stocks have behaved very well … But there are many other sectors – textiles, cars, agriaries, chemicals – which will now face higher prices than we thought only 48 hours ago.”
Uncertainty, she said, could block investments. “People who want to make investments in CAPEX on pharmaceutical or textiles – they will all be seated. No one will do anything because things change fairly quickly with a pen.”
The United States has imposed 27% of reciprocal prices on most Indian products from April 9, in addition to the basic line at 10% from April 5. While sectors such as energy, semiconductors and certain pharmaceutical products have been exempt, key Indian exports, including clothing, medical devices and jewelry should be affected.
The Indian government said that it closely assessed the impact and exploration of the means to transform the disruption into an opportunity thanks to a deeper commercial commitment to the United States.
https://www.youtube.com/watch?v=4wddwaxgnzi
